Housing Prices

[Webmaster]

I have been predicting a housing market crash in the UK for the last 3 years. In those 3 years house prices have probably doubled, and I've bought a house! Surely however the bubble will burst sooner rather than later. It seems that way in the US...

[ali]

The USA shows what can happen when the market gets out of control. Massive amounts of lending in the 'sub-prime' (which means low credit rating) market and then a hike in interest rates causing financial difficulties for these people who took out a mortgage. Several lending companies are already in trouble and there is surely more to come. Not only will the housing market rapidly fall but the economy as a whole will suffer.

Hopefully the demand for housing the UK is strong enough to prevent such a crash landing, housing prices may well be out of reach for many first time buyers, but a collapse of the market will hurt a lot of people as the economy falters and fails. I'd rather have a job and be able to rent a home than face repossesion after losing my job in a nationwide recession!

[Brian]

Have just been watching the Anglian News. Apparently house prices in cambridge have been rising at an average of £2 an hour over the past few years. wow, £2 an hour, 24 hours a day 7 days a week. Not bad!

[ajwt2]

Wow! My house earns as much as I do! Kinda shows the futility of work, get up, trudge to work, spend 40 hours a week there, and yet your wee house that just sits there relaxing in the sun earns more than you do! Something just isn't right

[ali]

House prices are going down, down, down. The buble is bursting and it is going to be amusing watching all those estate agents and buy to let agencies crash and burn   

[FallingStar]

Supply and demand.

I've been predicting a house price mini crash since 1999 (want any marconi shares?).

If its about to crash now why is the oh so wise government having a million new homes built in the south east. We're having 10000 new ones built just down the road from us, which will be nice. There must be a need from more single families, immigrant workers, by-to-rent and maybe population migration to where the work is?

[Will]

Hurrah, bring on the price crash  . It would be nice to be able to get something one day.

Increasing house prices only benefits you if are using it as an investment, and plan to sell it and keep the money.  If you sell it to buy a new house, then it doesn't matter how much it went up or down, because probably your new house's price has been going up and down by a similar amount.

So high house prices only benefit people with more than one house, and raise the barriers to new house buyers.  I fail to see why anyone thinks it is a good thing for the ordinary person.

[dal]

wise up guys. OK there is going to be adjustment in house prices. But is 10 or even 20% going to make a huge difference? THERE IS NEVER BEEN A CRASH IN HOUSE PRICES!!! Look at all the stats you want. PEOPLE LIKE TO TALK AND DREAM BECAUSE ITS EASY. you lot have been doing to much listening and not enough thinking! FOR A LONG TIME!

HOPE YOU ALL HAVE SOMEWHERE TO LIVE IN THE FUTURE!

 

[HiHo]

Firstly: In one looks at the house prices adjusted against inflation since 1952 as published by Nationwide Building Society you can see that between 1991 and 2001 the average house price dropped significantly below the long term trend. If being above the trend line is a boom then surely this would count as a bust or crash.
Secondly: Ask any one who lost there home and had massive negative equity or builders who went out of work whether a crash happened in 1990/1991. In a 5 year period house prices fell by 40% from a peak of about 109k to 69k, the majority of that in a year or two. Plus thats the average and deviations around that were much higher. For example I know of flats that were selling for £60k that 5 years later were selling for £15k. That's an enormous drop.
Guess it depends on what you define as a 'crash'?

[Webmaster]

Just found out my house has gone up 50K in 14months, or 25% increase. wow!

To help clear up some confusion over a 'house price crash' have a look at http://www.whatprice.co.uk/financial/housing-market/house-prices.html (http://www.whatprice.co.uk/financial/housing-market/house-prices.html) it shows that although the value of a home has generally increased over time, once you take inflation into account the picture clearly isn't so roseym the 70's, 80's and 90's all had periods of decline.

Also bear in mind that these figures are for the UK as a whole, certain regions where probably affected far worse by the last crash than others. 10's of thousands of people entered negative equity during that period!

[ajrimmer33]

It's interesting, looking at the housing market a year on from when all these posts were first written. I dare say nobody will even look at this topic again now has so much has happened. Well the housing market bubble has well and truly burst, I hear even in London the prices are starting to fall. And if Eastern Europe continues to exceed the West in economic growth terms, the Eastern Europeans currently residing in the West, particularly in Britain may eventually find better employment opportunities and strong wages an incentive to go home again. Interesting times. Personally I don't believe they will go down much, the demand still heavily outweighs supply in Britain so unless they build a million houses in one year to really push the prices down, then we will see lower but still very high house prices in the UK for a long time. Also the problem was never about houses being too expensive so people stopped buying, the problem was that nobody could get cheap finance anymore, as interest rates kept going up and banks found it harder to lend at reasonable rates. A year from now may tell us an entirely different story altogether. We'll just have to see. www.sharetraderguide.com

[Webmaster]

Hi ajrimmer,

Thanks for reviving this topic, its intesting to see what our thoughts were a year ago, and what has happened in that time. Looks like ali's predictions on the USA sub-prime market were bang on the money!

"Massive amounts of lending in the 'sub-prime' (which means low credit rating) market and then a hike in interest rates causing financial difficulties for these people who took out a mortgage. Several lending companies are already in trouble and there is surely more to come. Not only will the housing market rapidly fall but the economy as a whole will suffer."

It will certainly be interseting to see what happens in 1 year, I personally think that markets always tend to over-react (especially in illiquid situations) so we will be seeing a sharp downturn in housing prices in the short-term but then probably a rapid recovery.

[HighRider]

The U.S. is just not looking good. Many many families are defaulting on their mortgages and just leaving there homes. There are whole communities that this happens to and they just abandon everything.  The bubble did definitly burst.  Also, just walking around some of the outskirts of London you see many more for sale signs than used to be.   

[HiHo]

my folks come from a fairly low wage rural area. house prices there have been ridiculous and it staggered me that so many people could afford such large houses. Well it appears that maybe they couldn't as lot of them have sale signs up and have done now for many months.

Also a whole new development has been built and apparently not a single one sold in over 6 months.